Britain's top share index closed 2.3 percent higher on Monday propelled by gains in banks, with Lloyds Banking Group up after its chairman said he was to step down, and in energy stocks as oil prices rose. By the close, the FTSE 100 was 98.34 points higher at 4,446.45 points, the session peak, having rallied from a low of 4,307.72.
"It's a good start to the week, boosted by Wall Street's rally in the afternoon, although volume was pretty weak with not alot about for real direction aside from the Lloyds news," said Mic Mills, trader at spreadbetter ETX Capital. US blue chips rallied after sharp falls on Friday, up 1.9 percent by London's close with Banc of America gaining as Goldman Sachs upped its rating on the bank to "buy".
Banks added the most points to the FTSE 100 index led by Lloyds Banking Group, up 9.9 percent as favourable changes to the terms of a planned placing and open offer accompanied news its chairman would depart by June 2010. Victor Blank is to step down as chairman of the group in the next year, following intense criticism of the part-nationalised British bank's purchase of troubled rival HBOS.
Lloyds also tweaked the terms of its 4 billion pound fundraising so as not to penalise small shareholders if they do not stump up more cash. Standard Chartered, HSBC, Barclays and RBS gained 4.4-8.5 percent. Energy stocks pushed higher as oil prices rose to over $58 a barrel.
Royal Dutch Shell rose 2.1 percent. The Times newspaper said shareholders at the oil giant had increased pressure on it to reconsider its pay policy as a second institutional investor promised to vote against the directors' remuneration report at Tuesday's annual meeting. BG Group, BP, and Cairn Energy were 1.4-5.2 percent higher.
Cairn Energy, due to issue a trading update on Tuesday, has significant exposure in India and it benefited, along with miner Vedanta Resources, up 6.8 percent, after a decisive election victory for the ruling coalition in that country calmed fears of political instability. "Cairn Energy and Vedanta are having a good day based on the view that the Congress Party success in the Indian elections will prove favourable over the medium term", said Manus Cranny, senior market commentator of MF Global Spreads.
Mining stocks were mixed, however, as copper rallied from earlier falls, but gold fell. Shares in Randgold Resources, a straight proxy for the gold price, was a big blue chip faller, down 2.1 percent Platinum miner Lonmin lost 2.0 percent, while Mexican silver miner Fresnillo shed 3.7 percent impacted by a Citigroup downgrade to "hold" from "buy".
Broker comment also knocked Rio Tinto, down 0.5 percent, with a downgrade by Exane BNP Paribas to "neutral" countering an upgrade to "hold" from RBS. An executive at Rio Tinto said roughly half China's iron ore mines may have shut down since prices for that commodity dropped, opening the door for other low-cost producers to supply China.
But Anglo American, Antofagasta, Xstrata BHP Billiton, Eurasian Natural Resources and Kazakhmys rose 0.3-2.5 percent. Tour operator Thomas Cook Group was a big individual FTSE 100 gainer, up 6.3 percent after recent results and on news from its majority shareholders, Germany's Arcandor.
The debt-burdened retailer, which has a controlling stake in Thomas Cook, plans to ask the German government for 650 million euros ($885 million) in loan guarantees and a loan from the German state development bank. Market heavyweight Vodafone was in demand ahead of full-year results due on Tuesday, adding 3.5 percent.